HOW TO HANDLE YOUR MONEY

PERSONAL MONEY MANAGEMENT

IMPORTANT TERMS TO UNDERSTAND

1. Income—money you earn

2. Savings—income a person has not spent after

buying things he /she wants or needs3. Investing—putting money aside in order to

receive a greater benefit in the future4. Interest—a fee for the use of the money

invested; aka, profit

THINK ABOUT YOUR MONEY

• What is the advantage of a savings account over a checking account?• It’s a form of

investing your money• You earn a higher

interest rate on your money

KEEP ON THINKING

• When is the BEST time to borrow money (obtain a loan)?• Look for low

interest rates!!! Shop around with different lenders• Work hard to keep

your credit score high

MORE THINKING

• When should people buy less on credit?• When you already

have debt accumulating• When interest

rates are high

BE CAREFUL!!!

• Why are credit cards dangerous?• You must pay

them off• Interest rates add

more to the money you owe• High debt to

income ratios can damage your credit rating

TRY TO INVEST YOUR MONEY

• There are a variety of ways to make money on your money• Open a savings account• Buy certificates of deposit

(CDs)—these carry a higher interest rate than a savings account

• Buy bonds—the longer you wait for your bond to mature the money you will make

• Buy stocks & mutual funds—but be willing to wait; few people can “get rich quick” in the stock market

REMEMBER—YOU HAVE CHOICESHow you spend your money is your choice• Make sure to be able to live on the

money you earn to avoid debt• Develop a budget & review it

frequently• Save money—its recommended you

have a minimum of 3 months salary saved just in case you lose your job

• Be careful with this concept: opportunity cost• This is when you have money left

over after meeting all your expenses and you CHOOSE to spend it

• Pay attention to how you choose to use this money

• You can save it!• You can spend it on something

important like car repairs• You can “treat” yourself to

something, maybe a nice dinner out, a new outfit, etc

• BUT—think about the long term cost of your choice